British Airways in record £400m loss

BA lost more than £400million in the year to March - its worst
result since the airline was privatised more than two decades ago.

In 2007-08, BA achieved a record profit but the carrier was
caught in a vicious squeeze between falling demand, as the recession
took hold, and a huge rise in fuel costs in the wake of last year's oil
price surge.

BA's fuel bill rose by more than 40 per cent, bringing it to almost £3billion.

There has been a sharp fall in the number of people who are prepared to pay a premium to fly first or business class.

BA reckons its fall in premium traffic is not as steep as the decline seen by other airlines.

Dark clouds: The airline has unveiled its worst results since it was privatised two decades ago

However, the 15 per cent fall in premium traffic in the final three months of the financial year to March cost the airline dear on its most profitable route between Europe and the US.

Walsh yesterday defended the decision to axe BA's dividend.

'It was an obvious decision in the current environment,' he said. 'We are being very realistic in terms of how we see the economy.'

BA's average prices fell 12 per cent in the three months to the end of March.

The airline is set to mothball up to 16 of its aircraft next winter. Staff numbers - which have fallen by 2,500 over the past 12 months - are also to be cut, with employees being urged to take unpaid leave or move to parttime working. Meanwhile, Walsh is to give up a month's salary.

But BA is still preparing to make further redundancies from its 40,000-strong workforce.